FERNANDINA BEACH - More than $1 million has been spent to arbitrate a three-year dispute between Fernandina Beach and McGill Aviation, the municipal airport's fixed base operator.

The fixed base operator runs the airport on a day-to-day basis and sells fuel to pilots who use the airport.

As the latest circuit court decision is appealed to the Florida Court of Appeal in Tallahassee, both sides say they are frustrated because the other isn't willing to settle.

A case file 9 inches thick sits at the Nassau County Courthouse, containing pages and pages of legal motions, briefs, arbitrator transcripts and other communications just on the 2006 case and its appeal alone.

The tangled dispute involves deeds going back to 1942, questions of whether the federal government should settle some accounting disputes and a hand-drawn map, all creating a "never-ending saga of more," according to Mayor Bill Leeper.

So far, the city has spent $563,700 for the arbitrator, attorneys' fees and other costs. McGill Aviation has spent nearly as much.

"It is quite amazing," McGill Vice President Sean McGill said "Both sides have paid $1.1 million to date and we paid $500,000 for the business. My dad is selling other properties to pay for this."

Leeper is frustrated, too.

"It seems like a simple matter and it's obviously not," he said. "I don't know what to do. You have to have parties willing to settle the case."

McGill and the city have been in a legal tussle since August 2004 when McGill requested arbitration of its lease disputes with the city, as well as more than $100,000 in damages. McGill charged the city was slowly taking portions of McGill's leasehold and using it, while continuing to charge the company rent for the land.

The city responded in October 2004 by trying to evict McGill, filing a suit charging the company owed about $85,000 in rent and fees.

"It was a poorly written lease to begin with that McGill assumed from the previous [fixed base operator]," Leeper said. "There is a hand-drawn map in it. Who's to say where the boundary of the leasehold is?"

The city also stopped accepting McGill's rent checks. In the years since, McGill has paid the rent as well as the city's share of revenue earned on gas sold at the airport by McGill, into a court-ordered escrow account. That account now contains $186,289.62

Circuit Judge Brian Davis issued a temporary injunction in October 2004 stopping the city from evicting McGill until the legal issues between the two were resolved, and ordering the parties to arbitration.

A SECOND LAWSUIT

The city filed a second lawsuit last year, asking that certain issues not be subject to arbitration and instead be resolved using FAA dispute-resolution mechanisms.

Davis denied the request in November. The city appealed Davis' ruling to the Court of Appeal shortly after. The city's brief is due there by March 31.

McGill said the city is spending $150 an hour for travel time paid to Bell, Leeper and Roper, the Orlando law firm handling the case. It is the same firm used by the city's insurer, but insurance is not covering the cost of arbitration. The Leeper in the law firm is not related to Fernandina Beach's mayor.

City Attorney Debra Braga would not discuss details of the case because it is in litigation, but confirmed the travel charge is correct, but the per-hour charge of the attorneys is $260 an hour.

Leeper said the arbitrator handling the case has done work before for the Jacksonville law firm of Rogers Towers Bailey Banks Jones & Gay, McGill Aviation's attorneys.

McGill said the loser of the arbitration must pay all attorneys' fees.

Braga said it would have to be negotiated, because there is the arbitration and three court cases. Braga doesn't expect a ruling from the appeals court before May.

Leeper said he wishes the public could know all the details, but both sides are staying mum because of the ongoing litigation. He said McGill is making unreasonable demands that the city can't give into.

"We can't give away the airport," he said.

A MATTER OF PRINCIPLE

McGill officials say they're anxious to resolve the issue but now, it's a matter of principle.

"My dad is an attorney and has done construction litigation for 25 years. He's also been an arbitrator," McGill said.

"The city can take money out of the general fund to pay for this. My dad is using his own money. He wouldn't do that unless he was fairly confident of our position."

In the end, neither side may really win, Leeper said.

"The only people that are benefitting are the lawyers and the arbitrator. There was fault on both sides but it's frustrating that we can't settle this."